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Applied Sciences,Chemistry See all
Applied Sciences,Chemistry,Communications,Economics,Engineering,Environmental science Hide all
Teaching Since: Apr 2017
Last Sign in: 363 Weeks Ago, 6 Days Ago
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  • MBA,PHD in Psychology
    Northwest Florida State College
    Jun-1992 - May-1997

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  • Professor
    Northwest Florida State College,
    Aug-2006 - Nov-2015

Category > Economics Posted 08 May 2017 My Price 9.00

Consider the following two options for financing a car

Consider the following two options for financing a car:

• Option A. Purchase the vehicle at the normal price of $26,200 and pay for the vehicle over three years with equal monthly payments at 1.9% APR financing.

• Option B. Purchase the vehicle for a discount price of $24,048, to be paid immediately.

The funds that would be used to purchase the vehicle are presently earning 5% annual interest compounded monthly.

(a) What is the meaning of the APR of 1.9% quoted by the dealer?

(b) Under what circumstances would you prefer to go with the dealer’s financing?

(c) Which interest rate (the dealer’s interest rate or the savings rate) would you use in comparing the two options?

Answers

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Status NEW Posted 08 May 2017 11:05 AM My Price 9.00

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